Health & Well Being

Unrestricted Economic Welfare Menaces Human Well Being

By Rita Joshi

BERLIN (IDN) – The Sustainable Development Goals and the Paris climate agreement set the target of prosperous development for people and our planet. Yet, it remains challenging to translate these aims into concrete policy implementations without risking human welfare and the Earth ecosystem.

A new climate study argues that optimizing economic welfare without constraints might put human well being at risk. While being successful in bringing down costs of greenhouse gas reductions for instance, the concept of profit maximization alone does not suffice to avoid the tipping of critical elements in the Earth system, which could lead to dramatic changes of our livelihoods.

The scientists use mathematical experiments to compare economic optimization to the governance concepts of sustainability and the more recent approach of a safe operating space for humanity. All of these turn out to have their benefits and deficits, yet the profit-maximizing approach shows the greatest likelihood of producing outcomes that harm people or the environment.

"Economic optimization can be quite effective in reducing current greenhouse-gas emissions, it certainly has its strengths. Yet under human-made global warming, we face a world full of complex non-linearities, namely the tipping elements in the Earth system," says the study.

It adds: "The ice sheets of Greenland and Antarctica might collapse at some point if greenhouse-gas emissions do not get reduced, or the great circulation systems in ocean and atmosphere could fundamentally change. In such a setting, optimization can lead to dangerous side effects. Even for relatively high risks, and even if profit-maximizing agents in our calculations are far-sighted, they tend to accept the possibility of detrimental environmental and societal impacts."

This is the result of mathematical experiments that the scientists performed. While governments worldwide agreed on ambitious targets such as the 17 UN Sustainability Goals and the Paris Agreement which aims at limiting global warming to well below 2 degrees Celsius, there is no consensus on how to reach those targets.

The scientists identified and then analysed three big concepts: economic optimization (act to maximize your expected profit, with discounted future), sustainability (act to always stay above a minimum standard of expected profit, with discounted future), and the safe operating space approach, relying on the Planetary Boundaries concept (act to always stay within the safe space for humanity to ensure the functioning of the Earth’s life-supporting systems).

"Take the Atlantic Overturning Circulation, better known as the Gulf Stream System, one of the great potential tipping elements in the Earth system," says co-author Jonathan Donges, from PIK and Stockholm Resilience Centre.

"We know, both from our understanding of the physics and from observations, that it can be put at risk by global warming. But we cannot yet calculate the timing of a tipping as well as the potential damages arising from it."

Hence it is clear that economic optimization of climate policy would normally not be able to count it in as future costs. "From the safe operating space perspective, we'd have to cut greenhouses gas emissions immediately to make sure the Gulf Stream does not get seriously disturbed,” says Donges.

"But you cannot say that 'safe' is always 'best'. Because from a sustainability point of view, poverty reduction is one main goal. If we ended fossil fuel use too abruptly, the costs of a transition to clean energy would be substantial and might, at least for a certain time, rise energy and food prices and consequently impede the poverty reduction goal."

Therefore, it depends on the circumstances whether a sustainable or safe approach is most suitable. The only thing clear is that in a no-policy scenario of unmitigated greenhouse-gas emissions, a Gulf Stream System collapse would also have negative impacts on poverty reduction.

"It turns out that there is no master concept for countering environmental challenges," says co-author Jürgen Kurths, head of the PIK research department 'Transdisciplinary Concepts and Methods' and a pioneer of the complex non-linear systems analysis applied here.

"Yet our analysis is a first step to provide decision-makers with better insights on which concept for achieving the climate and sustainability targets works how and under which circumstances. Neither economic thinking nor good will alone suffice to deal with a world full of complex non-linear dynamics." [IDN-InDepthNews – 07 July 2018]

Photo: The UN General Assembly agreed May 10 to take the first step toward considering whether a new international instrument was needed to address gaps between international environmental agreements. Credit: UN